Oberweis International Opportunities Fund closing to new investors

Comments

• Pete64

  June 2017

  Thanks for the information, I always held OSMAX and watched OBIOX, now I actually bought footholds in OBIOX in two accounts where the Minimums were exceptionally low.
• LLJB

  June 2017

  The language here is very strange. It reads like this is a hard close except for retirement accounts but it seems to include retail IRAs. It also includes advisor managed accounts but only for rebalancing. Am I reading that incorrectly? Do they really expect Fido or Schwab, E*TRADE or TD to block taxable accounts and allow IRAs? Maybe they have that capability but I don't think I've ever seen it before. And isn't restricting advisors to rebalancing a wide open door that's almost impossible to police? It means all the advisors and clients who follow rules no matter what will limit themselves while anyone who views rules with more flexibility can do what they want more or less. If the old studies are still accurate that should mean about 10% of advisors wouldn't consider being more flexible.
  
  I own the fund in a rollover IRA for years and I've been a very happy camper. I just hope they'll let me continue to buy and sell as I desire.
• TheShadow

  June 2017

  @LLJB
  
  I thought the same thing about the hard close, but whoever writes these notices, does not write them in layman's words.
• LewisBraham

  June 2017

  OBIOX reminds me of that old poem about a little girl by Longfellow:
  When she was good
  She was very, very good,
  And when she was bad she was horrid.
  Down 60.5% in 2008.
• LLJB

  June 2017

  @LewisBraham... luckily I didn't own the fund then but using 2008 as the basis of your comment misses how they dealt with those losses. As Dr. Snowball reported in his 2013 review of the fund, "Indeed, OBIOX in 2013 isn’t even the OBIOX of 2009. During the 2007-09 market trauma, OBIOX suffered a 69.7% drop, well worse than their peers’ 57.7% decline. The manager was deeply dissatisfied with that performance and took concrete steps to strengthen his risk management disciplines. OBIOX is a distinctive fund and seems to have grown stronger."
  
  That's not to suggest it can't still perform poorly but if you look at the upside and downside capture ratios over the last 3 and 5 years, they've done pretty well. To your point, the last 12 months haven't been great, but if you can deal with the volatility then the results over time have rewarded you with good risk adjusted returns.
  
  One of the things that amazes me is the tax efficiency. It's a very high turnover fund, higher than I prefer by a lot, and M*'s tax cost ratio is very low. I haven't figured out exactly how they manage that based on the available information and I don't always trust M*'s numbers to tell me what I think they're telling me, but in absolute terms it's an impressive ratio that seems inconsistent with their turnover.
• David_Snowball

  June 2017

  "... she was horrid."
  
  Maybe. The manager did address this question when I talked with him, and it's reflected in the profile. Bottom line: he was surprised and appalled at '08, and began a thorough review and recalibration of some of their stress tests and sell disciplines. Over the past five years, anyway, he's had much lower downside deviation, a better bear market rating and higher returns than his peers.
  
  For what that's worth,
  
  David
• LewisBraham

  June 2017 edited June 2017

  This is good news if their recalibration works, and I'll stand corrected during the next correction if it is. However, there is a hole in the narrative. During the 2000-2002 bear market, Oberweis Small Cap Opportunities (OBSOX) dramatically underperformed its small-cap growth peers and the Russell 2000. It did so also in 2008. Why wasn't the process corrected before during the last dramatic 2000-02 underperformance? Admittedly, Oberweis Micro OBMCX did better during the 2000-2002 period, but so did all micro-caps and it actually lagged significantly a micro-index fund --Bridgeway's BRSIX. In some respects, Oberweis reminds me of Bridgeway. Historically, the funds have done well in bull markets and poorly in bears. They seem to be slightly leveraged--not literally but from a beta perspective--amplifying their upside and down by more aggressive bets in sectors like technology. Now the style re-calibration--at both shops actually post 2008--may have changed that, but it seems the nature of the beast somewhat with small-cap growth funds that they amplify risks. From a purely sector perspective recent years have been particularly good for the tech sector and Oberweis tends to focus on those kinds of names. When the sector turns, the performance may not be so good.
  Regarding tax efficiency, one secret many investors don't realize is that when a fund has a small asset base that is growing rapidly it is inherently tax efficient. If you have $50 million of capital gains it is far more dramatic in a $100 million fund than a $1 billion fund. New money dilutes the tax impact of all those gains even in a high turnover fund. When money flows in the other direction--out of the fund--the opposite can be the case.
• Ted

  June 2017

  @Lewis: "Historically, the funds have done well in bull markets and poorly in bears." That's because the Oberweis family is more familiar with bulls rather than bears. There is nothing better than Oberweis Chocolate Ice Cream.
  Regards,
  Ted
  https://www.oberweis.com/about-us
• TheShadow

  June 2017 edited June 2017

  I spoke with an Oberweis CSR this morning...it is a "hard close" with existing investors unable to make additional investments.
• LewisBraham

  June 2017

  I predict an Oberweis International Smidcap Fund will be opening soon.
• TheShadow

  June 2017

  I think an alternative fund will be next.